Susan Collins

Ms. COLLINS

Ms. COLLINS. Mr. President, I ask unanimous consent that the Senator from Mississippi, Mr. Cochran, be added as a cosponsor of the Rockefeller-Collins-Smith, et cetera, amendment.

Ms. COLLINS. Mr. President, I rise today with my colleagues, Senator Rockefeller, Senator Ben Nelson, and Senator Gordon Smith, as well as with several other of our colleagues, to offer an amendment that begins to address the fiscal plight of our States. I congratulate Senator Rockefeller and Senator Nelson for their hard work on this issue. Originally, we had slightly different approaches but, in an attempt to get something done that will help our States that are struggling with fiscal crises, and more important, the low-income families who are dependent on Medicaid for their health care needs, we joined together and came up with a compromise that I hope will win widespread bipartisan support. Here in Washington, consumed with our own budget issues, we too often forget that we have 50 partners in our efforts to provide needed health care, education, and other essential services to our citizens. Our partners are our States, and they need our help and they need it now. The recession may officially have come to an end, but its effects still linger and they are being felt acutely by States from Maine to Nebraska, from West Virginia to Oregon. The resulting rise in unemployment, as well as the decline in tax revenues, coupled with the aftermath of September 11, have placed enormous and unanticipated strains on our State governments' budgets. States are facing a dramatic and unexpected decrease in government revenues at precisely the time when more revenues are needed to respond to the needs of more and more Americans who are having difficulties making ends meet. The combination of increasing demand for services and resources that have declined is causing a fiscal crisis for States across the Nation. According to the National Governors Association and the National Association of State Budget Officers, more than 40 States are facing an aggregate budget shortfall of between $40 billion and $50 billion. Most States have seen their estimates of tax collections decrease, often precipitously and unexpectedly. State governments are scrambling to respond. Forty-nine States are required by law or their constitution to balance their budgets, so running a temporary deficit for these States is not a possibility. Moreover, the problem is getting worse. It is not likely to improve anytime soon. A survey by the National Governors Association shows that individual tax revenues for the first 4 months of this year are running nearly 15 percent behind last year's level. The problem also is not an isolated one. It is not limited to just one area of the country. Mr. President, 39 States have been forced to reduce their already-enacted budgets for fiscal 2002 by cutting programs, tapping rainy day funds, laying off employees, and reducing important services. According to the Conference of State Legislators, States have been forced to cut a number of critical programs. Twenty-nine States have attempted to balance their budgets by cutting spending on higher education--something no one likes to see; 25 States have cut corrections programs. Others have cut K-12 education and the Medicaid Program; 10 States have reduced aid to local governments. In addition, a number of States have resorted to increasing taxes and fees by a total of $2.4 billion. The situation in my home State of Maine is typical of the problems faced by many States. Our fiscal year just ended on June 30. Just this past March, State revenues appeared to be on target at approximately $2.4 billion. In April, after the State legislature had adjourned for the year, State forecasters projected a shortfall of $90 million, largely due to sluggish capital gain receipts. By mid-June, the expected shortfall had risen by another $20 million, due to lower than expected sales taxes, income taxes, and corporate income tax receipts. All were off projections. So you can see how quickly the financial system turned from relatively positive to negative in my State and many others. The shortfall in the fiscal year that just began in May looks even worse. We may experience a shortfall of $180 million. That is enormously difficult for a State such as Maine to deal with in a way that does not hurt the people we serve. To close the books on last year, the Governor of Maine had nearly emptied our State's rainy day fund. This year, the choices are going to be far tougher. Already, cuts in education funding, furloughs for government workers, and cuts in the Medicaid Program are on the horizon. I believe States need to tighten their belts in times of fiscal difficulty just as the Federal Government should do in austere fiscal times. We are not talking about taking the States off the hook. They are still going to have to make a number of very difficult choices in order to balance their budgets. But the unexpected nature and the severity of the crisis that States now face has convinced me we need to give them some temporary help. We should do so by targeting resources where they are most needed for health care and social services programs. Our amendment would provide a temporary increase in the Federal Medicaid matching rate. It would also provide block grant funds to every State. Specifically, it would provide $6 billion to States by holding each State's Medicaid matching rate harmless for the next 18 months. It would also provide a temporary increase in the Medicaid matching rate. I note that over 30 States are scheduled to see a decrease in their Federal matching under the Medicaid Program. So we would hold these States harmless. They would no longer see their Medicaid rate drop at the worst possible time for them from a fiscal standpoint. The legislation would also provide $3 billion through a temporary block grant to help States pay for the rising demand in social services resulting from the economic downturn. As Senator Rockefeller indicated, that could be used, for example, for child care programs that are so important to our States. In order to be eligible for the increased Medicaid funds, States are asked to maintain their Medicaid Programs. There are some States that have acted to contract their Medicaid Programs in order to cut their costs. But these States could reverse those actions and, thus, become eligible for the increased Medicaid match that is provided by this bill. Regardless, every State is going to benefit from the package we put together. Every State will receive a share of the block grant funding and will be protected by the provisions that maintain the Medicaid matching rates at no less than the current level. Those are the so- called hold harmless provisions. Our amendment is strongly supported by the National Governors Association, as you might well expect. They need our help. But it is also strongly endorsed by a number of health care providers that are very concerned about their ability to continue to provide much-needed quality health care to citizens who rely on the Medicaid Program. It has been endorsed by the American Hospital Association, the American Health Care Association, which represents our nursing homes, the Visiting Nurse Associations of America, and a host of other health care provider groups. The support that our legislation has received underscores the importance of providing assistance to States at a time when many are being forced to look toward cuts in vital health care programs in order to balance their budgets. Our amendment targets most of our assistance on Medicaid. The reason is that the Medicaid Program is the fastest growing component of State budgets. While State revenues were stagnant or declined in many States last year, Medicaid costs increased by 11 percent. This year, Medicaid costs are increasing at an even greater rate--13.4 percent. My home State of Maine is one of only a number of States that have been forced to consider resorting to cuts in Medicaid in order to make up for their budget shortfall. The amendment we are offering today--I want to stress this point-- would not free States from the burden of making painful, difficult choices in crafting their budgets for the current year. But it would help to lessen the impact of the cuts. It would help to soften the blow from a situation in which the States are really not to blame. It is a combination of events--of declining tax revenues, lingering impact of a recession, and the events of September 11--that has created the fiscal crisis for our States. Our legislation would help protect vital programs for those who can least bear the cuts in services. To the State of Maine, our amendment would mean $54 million for health care and social services that would help our most needy citizens and assist our Governor and the legislature in producing a balanced budget without resorting to draconian cuts that would have a terrible impact on our State citizens. Congress is most effective when it stands arm in arm--not toe to toe--with our partners, the States. Our States face a crisis of vast and still expanding dimensions. I think we need to help, and we need to help now. The longer we wait, the more difficult it is going to be for our partners, the States. This amendment is a modest amendment. Other versions of this amendment were far more expensive. But in recognition of the fiscal realities we face, we have limited its scope. But it is an amendment that would make a difference to the States and to needy citizens across our Nation. I urge my colleagues to join me in providing much needed but temporary fiscal relief to the States.

Ms. COLLINS

Ms. COLLINS. Mr. President, as an original cosponsor of the tripartisan 21st Century Medicare Act, I rise in support of this amendment to make affordable prescription drug coverage available to all of our Nation's seniors. Prescription drugs are as important to a Medicare beneficiaries' health today as a hospital bed was in 1965, when the program was created, and I have long been a supporter of providing a prescription drug benefit as part of our efforts to strengthen Medicare. With recent advances in research, prescription drugs can literally be a life-line for patients whose drug regimen protects them from becoming sicker and reduces the need to treat serious illness through hospitalization and surgery. Soaring prescription drug costs, however, have placed a tremendous financial burden on the millions of Medicare beneficiaries who must pay for these drugs out of their pockets. More and more, I am hearing disturbing accounts of older Americans who are running up huge, high-interest credit card bills to buy medicine they otherwise couldn't afford. Even more alarming are the accounts of patients who are either skipping doses to stretch out their pill supplies or being forced to choose between paying the bills or buying the prescription drugs that keep them healthy. It is therefore critical that we bring Medicare into line with most private sector insurance plans and expand the program to include prescription drugs. The tripartisan plan that is before us today will provide an affordable and sustainable prescription drug benefit that will be available to all seniors. Moreover, unlike the alternative bill, our plan will make the drug benefit a permanent part of Medicare and is fully funded at $370 billion over 10 years. Under the tripartisan bill, all seniors will have the choice of at least two prescription drug plans, regardless of where they live. This will enable them to select the kind of prescription drug coverage that they need. Moreover, the coverage under these plans will be comprehensive. Seniors will have access to every drug, from the simplest generic to the most advanced, innovative therapy. Our plan is also affordable and has the lowest monthly premium--$24-- of any of the comprehensive prescription drug proposals that are on the table. Not only does our plan offer a lower premium, but it also offers lower copays for most drugs than the amendment proposed by the Senator from Florida. As the senior Senator from Maine pointed out on the floor the other day, seniors will pay more for most of the top 50 drugs under the Democrats' bill than they will under the tripartisan plan. For example, the copayment for Glucophage, which is used in the treatment of Type 2 diabetes, would be $40 under the Graham-Kennedy bill, and only $31 under the tripartisan plan. In fact, our plan is such a good deal that the Congressional Budget Office tells us that just about everyone will take it. According to the CBO, 93 percent of seniors will enroll in our program, while 6 percent will elect to retain their current prescription drug coverage. This means that 99 percent of all seniors will have prescription drug coverage once our plan is implemented. No one should have to choose between paying their bills and buying their pills. That is why our bill provides additional subsidies to low- income seniors. For example, the 10 million seniors nationwide, including 65,000 Mainers, with incomes below 135 percent of poverty will have 98 percent of their prescription drug costs covered by Medicare with no monthly premiums and no gap in coverage. In addition, these low-income seniors will not be subject to any deductible, and they will pay an average copayment of just $1 and $2 for each prescription. This is comparable to the copays required under Maine's Medicaid Program, which requires beneficiaries to pay $2 for each generic drug and $3 for each brand name drug. The 10,000 Maine seniors with incomes between 135 percent and 150 percent of poverty will also receive generous subsidies under our plan. All seniors with incomes below 150 percent of poverty will be exempt from the benefit limit. As a consequence, 80 percent of Medicare beneficiaries will never experience any gap in coverage under our plan. Seniors with incomes below 150 percent of poverty will also receive a subsidy that lowers their monthly premiums to anywhere between zero and $24 a month, based on a sliding scale according to income. My biggest concern about the amendment offered by my colleague from Florida is the cost. My understanding is that this plan will cost anywhere between $600 billion and $1 trillion over the next ten years. This is simply too heavy a financial burden for both current and future generations to shoulder, particularly given our mounting Federal deficit. Moreover, despite its tremendous cost, the alternative plan promises only temporary help, not a permanent solution. Their plan sunsets after 6 years, and makes no provision for a drug benefit after 2010. In other words, their plan ends just as the tidal wave of baby boomers is preparing to retire. The tripartisan plan also includes other improvements to the Medicare Program that are not included in the Graham-Kennedy proposal. The current Medicare benefit package, which was established in 1965, now differs dramatically from the benefits offered under most private health plans. Our bill would provide a new, enhanced fee-for-service option for Medicare beneficiaries that more closely mirrors private health plans. For example, it would cover more preventive services than traditional Medicare at little or no cost. It would also provide protection against catastrophic medical costs for those seniors with serious health problems. The traditional Medicare Program provides no such catastrophic protection. No one would be forced to enter this new plan. It is simply another option. If seniors want to stay in the traditional Medicare Program, that is fine, and they will still be eligible for the new prescription drug coverage. Access to affordable prescription drugs is perhaps the most important issue facing our Nation's seniors today. It is therefore my hope that the Senate will stop playing politics so that we can pass a meaningful Medicare prescription drug bill this year. The 21st Century Medicare Act is the only legislation before the Senate that has not just bipartisan, but tripartisan support. Moreover, it has the support of 12 of the 21 members of the Senate Finance Committee, which has jurisdiction over Medicare. That is not to say that I think the tripartisan plan is perfect. I do not, for example, like the copayments imposed on home health care in the new fee-for-service option, and I would, of course, prefer a plan that had no gaps in coverage. The tripartisan plan does, however, provide a major improvement in coverage, and I believe that it is the only proposal that gives our seniors any real hope of getting an affordable Medicare prescription drug benefit this year. Since the cost of providing a meaningful drug benefit will only increase as time passes, it is all the more important that we act now. I therefore urge all of my colleagues to join me in supporting this tripartisan amendment.

Ms. COLLINS

Ms. COLLINS. Mr. President, I rise today to introduce the ``United States Postal Service Commission Act of 2002.'' This legislation will establish a Commission to examine the challenges facing the Postal Service and develop solutions to ensure its long term viability and increased efficiency. The Postal Service's problems have reached a near crisis level. In 2000, the Postal Service lost nearly $200 million, while in 2001, this loss ballooned to $1.68 billion. Losses are projected to be $1.35 billion this year, despite the $675 million in appropriations from Congress to cover the unanticipated costs associated with the September 11 attacks and the anthrax incidents. The Postal Service is mandated by law to break even on its operating expenses and its capital needs, both of which continue to grow. The Postal Service is also fast approaching its $15 billion statutory borrowing limit. Given its recent history of increasing rather than paying down its debt, increasing the Postal Service's debt ceiling is not the answer. In addition, the Postal Service's long term liabilities are enormous, to the tune of nearly $6 billion for Workers Compensation claims, a staggering $32 billion in retirement costs and perhaps as much as $45 billion to cover retiree health care costs. Meanwhile, on June 30, consumers experienced a third postal rate increase in just 18 months. How could the Postal Service have landed in such dire straits? The Postal Service's problems stem from many causes. For example, the overall growth rate of mail has been declining since 1997, and first class mail volumes actually have declined over the past four years. This is particularly significant, as first class mail accounts for 48 percent of total mail volume. In addition, revenues from first class mail cover more than two-thirds of institutional costs, such as post offices. Shortfalls must be made up by decreasing costs, increasing volumes in other categories of mail or by increasing postal rates. Some of this declining volume can be attributed to the increasing forms of electronic communication, particularly the Internet, which has revolutionized the way we communicate and transact business. For example, while financial statements, bills and bill payments constitute about half of first class mail revenue, or about $17 billion annually, electronic bill payment is quickly becoming a major means of doing business. It is estimated that 75 percent of banks will provide online banking services by 2003. This is in addition to other competing methods of communication such as faxes and telephones. In addition, filing tax returns, receiving Social Security payments, and many other transactions are also available electronically. The Postal Service also faces significant labor-related costs. Indeed nearly 80 percent of its expenses are related to compensation and benefits. By comparison, 56 percent of FedEx's expenses and 42 percent of UPS's expenses are related to compensation and benefits. The need to preserve a viable Postal Service is clear. Americans rely on affordable, reliable and universal mail delivery as their primary means of communication. The Postal Service delivers more than 200 billion pieces of mail each year to nearly 140 million addresses, which accounts for more than 40 percent of the world's mail. Moreover, 1.7 million new delivery points are added each year--roughly the equivalent of adding the number of addresses in Chicago. More than seven million Americans visit post offices each day. In States with large rural areas, such as Maine, it is vital that postal services remain in place. If the Postal Service were no longer obligated to provide universal service and deliver mail to every customer, six days a week, the affordable communication link upon which many Americans rely would be jeopardized. Most commercial enterprises would find it uneconomical, if not impossible, to deliver mail and packages to these areas at rates that the Postal Service has been offering. In addition to providing a critical service to consumers, the Postal Service is the eleventh largest enterprise in the Nation with $66 billion in annual revenues. This is more than Microsoft, McDonald's and Coca Cola combined. While the Postal Service itself employs more than 700,000 career employees, it is also the linchpin of a $900 billion mailing industry that employs nine million Americans in fields as diverse as direct mailing, printing and paper production. Affordable postal rates are vital to the economic health of many companies, especially magazines, catalog houses and the service providers they use. The June 2002 rate hike alone represents a ten percent increase for periodicals, and a nine percent increase for catalogs. It is estimated that the combined effect of the past three rate increases, totaling 22 percent over just 18 months, have cost the magazine industry about $400 million. In May I met with a group of about twenty Maine businessmen and women involved in the mailing industry, who described for me the impact that rising postal rates have on their businesses. One magazine publisher told me that postage represents ten percent of her costs. I was amazed to hear that one of the catalog busineses pays more for postage a year than it pays to any one of the companies that supply the raw materials for its products. It was also startling to hear from one printer that his postage costs have doubled over the last ten years. Most of the people I met with are small business owners, and there are millions more across the country, all grappling with the same effects of rapidly rising postage costs. At the request of the Senate Governmental Affairs Committee and House Committee on Government Reform, the Postal Service produced a comprehensive Transformation Plan, which it presented to Congress in April. The Plan addresses general measures that the Postal Service believes it needs to take to ensure its survival, but it fails to lay out specific steps the Postal Service will take and a timeline for action. It is also unclear whether these measures will result in the cost savings necessary to ensure the long-term survival of the Postal Service. Many attempts have been made to reform the Postal Service over the years. My colleagues in the House of Representatives have tried for nearly eight years to pass postal reform legislation, but to no avail. Stakeholders have widely diverging views on what shape postal reform should take, if any. This lack of consensus on how or whether to deal with divisive issues has led only to stalemates in Congress. To take a fresh look at these difficult issues, I rise today to introduce legislation establishing a Presidential Postal Commission charged with examining the problems that the Postal Service faces, and developing specific recommendations and legislative proposals that Congress and the Postal Service can implement. Precedent exists for such a commission. In the late 1960s, the Kappel Commission was formed to resolve the crisis situation that the former Postal Department then found itself in, train cars of undelivered mail, strikes, and a host of other problems. The Kappel Commission's efforts laid the groundwork for the Postal Service we have today, which has functioned admirably for many years but is now in serious trouble. Mindful of the body of work that has been done in this area by my colleagues in the House and Senate, by the General Accounting Office, by the Postal Service itself and by others, I intend that this commission have a short life of one year, during which it will carry out its study and produce legislative proposals for consideration by the Administration and the Congress. Finally, I intend that the commission consider all relevant aspects of the Postal Service. Everything should be put on the table and evaluated. We need to ensure that the Postal Service will stand up to the challenges it is facing today and will face tomorrow. These and many more issues must be examined in depth, if we are to preserve this vital service upon which so many Americans rely for communication and for their livelihood. The Postal Service has successfully overcome numerous difficulties over its 226-year history, and has continued to deliver the mail faithfully. Yet it has reached a critical juncture and once again, it is time for a thorough evaluation of the Postal Service's operations and requirements.

Ms. COLLINS

Ms. COLLINS. Mr. President, I rise today to introduce the ``United States Postal Service Commission Act of 2002.'' This legislation will establish a Commission to examine the challenges facing the Postal Service and develop solutions to ensure its long term viability and increased efficiency. The Postal Service's problems have reached a near crisis level. In 2000, the Postal Service lost nearly $200 million, while in 2001, this loss ballooned to $1.68 billion. Losses are projected to be $1.35 billion this year, despite the $675 million in appropriations from Congress to cover the unanticipated costs associated with the September 11 attacks and the anthrax incidents. The Postal Service is mandated by law to break even on its operating expenses and its capital needs, both of which continue to grow. The Postal Service is also fast approaching its $15 billion statutory borrowing limit. Given its recent history of increasing rather than paying down its debt, increasing the Postal Service's debt ceiling is not the answer. In addition, the Postal Service's long term liabilities are enormous, to the tune of nearly $6 billion for Workers Compensation claims, a staggering $32 billion in retirement costs and perhaps as much as $45 billion to cover retiree health care costs. Meanwhile, on June 30, consumers experienced a third postal rate increase in just 18 months. How could the Postal Service have landed in such dire straits? The Postal Service's problems stem from many causes. For example, the overall growth rate of mail has been declining since 1997, and first class mail volumes actually have declined over the past four years. This is particularly significant, as first class mail accounts for 48 percent of total mail volume. In addition, revenues from first class mail cover more than two-thirds of institutional costs, such as post offices. Shortfalls must be made up by decreasing costs, increasing volumes in other categories of mail or by increasing postal rates. Some of this declining volume can be attributed to the increasing forms of electronic communication, particularly the Internet, which has revolutionized the way we communicate and transact business. For example, while financial statements, bills and bill payments constitute about half of first class mail revenue, or about $17 billion annually, electronic bill payment is quickly becoming a major means of doing business. It is estimated that 75 percent of banks will provide online banking services by 2003. This is in addition to other competing methods of communication such as faxes and telephones. In addition, filing tax returns, receiving Social Security payments, and many other transactions are also available electronically. The Postal Service also faces significant labor-related costs. Indeed nearly 80 percent of its expenses are related to compensation and benefits. By comparison, 56 percent of FedEx's expenses and 42 percent of UPS's expenses are related to compensation and benefits. The need to preserve a viable Postal Service is clear. Americans rely on affordable, reliable and universal mail delivery as their primary means of communication. The Postal Service delivers more than 200 billion pieces of mail each year to nearly 140 million addresses, which accounts for more than 40 percent of the world's mail. Moreover, 1.7 million new delivery points are added each year--roughly the equivalent of adding the number of addresses in Chicago. More than seven million Americans visit post offices each day. In States with large rural areas, such as Maine, it is vital that postal services remain in place. If the Postal Service were no longer obligated to provide universal service and deliver mail to every customer, six days a week, the affordable communication link upon which many Americans rely would be jeopardized. Most commercial enterprises would find it uneconomical, if not impossible, to deliver mail and packages to these areas at rates that the Postal Service has been offering. In addition to providing a critical service to consumers, the Postal Service is the eleventh largest enterprise in the Nation with $66 billion in annual revenues. This is more than Microsoft, McDonald's and Coca Cola combined. While the Postal Service itself employs more than 700,000 career employees, it is also the linchpin of a $900 billion mailing industry that employs nine million Americans in fields as diverse as direct mailing, printing and paper production. Affordable postal rates are vital to the economic health of many companies, especially magazines, catalog houses and the service providers they use. The June 2002 rate hike alone represents a ten percent increase for periodicals, and a nine percent increase for catalogs. It is estimated that the combined effect of the past three rate increases, totaling 22 percent over just 18 months, have cost the magazine industry about $400 million. In May I met with a group of about twenty Maine businessmen and women involved in the mailing industry, who described for me the impact that rising postal rates have on their businesses. One magazine publisher told me that postage represents ten percent of her costs. I was amazed to hear that one of the catalog busineses pays more for postage a year than it pays to any one of the companies that supply the raw materials for its products. It was also startling to hear from one printer that his postage costs have doubled over the last ten years. Most of the people I met with are small business owners, and there are millions more across the country, all grappling with the same effects of rapidly rising postage costs. At the request of the Senate Governmental Affairs Committee and House Committee on Government Reform, the Postal Service produced a comprehensive Transformation Plan, which it presented to Congress in April. The Plan addresses general measures that the Postal Service believes it needs to take to ensure its survival, but it fails to lay out specific steps the Postal Service will take and a timeline for action. It is also unclear whether these measures will result in the cost savings necessary to ensure the long-term survival of the Postal Service. Many attempts have been made to reform the Postal Service over the years. My colleagues in the House of Representatives have tried for nearly eight years to pass postal reform legislation, but to no avail. Stakeholders have widely diverging views on what shape postal reform should take, if any. This lack of consensus on how or whether to deal with divisive issues has led only to stalemates in Congress. To take a fresh look at these difficult issues, I rise today to introduce legislation establishing a Presidential Postal Commission charged with examining the problems that the Postal Service faces, and developing specific recommendations and legislative proposals that Congress and the Postal Service can implement. Precedent exists for such a commission. In the late 1960s, the Kappel Commission was formed to resolve the crisis situation that the former Postal Department then found itself in, train cars of undelivered mail, strikes, and a host of other problems. The Kappel Commission's efforts laid the groundwork for the Postal Service we have today, which has functioned admirably for many years but is now in serious trouble. Mindful of the body of work that has been done in this area by my colleagues in the House and Senate, by the General Accounting Office, by the Postal Service itself and by others, I intend that this commission have a short life of one year, during which it will carry out its study and produce legislative proposals for consideration by the Administration and the Congress. Finally, I intend that the commission consider all relevant aspects of the Postal Service. Everything should be put on the table and evaluated. We need to ensure that the Postal Service will stand up to the challenges it is facing today and will face tomorrow. These and many more issues must be examined in depth, if we are to preserve this vital service upon which so many Americans rely for communication and for their livelihood. The Postal Service has successfully overcome numerous difficulties over its 226-year history, and has continued to deliver the mail faithfully. Yet it has reached a critical juncture and once again, it is time for a thorough evaluation of the Postal Service's operations and requirements.

Ms. COLLINS

Ms. COLLINS. Mr. President, I rise in support of the amendment offered by my colleague from North Dakota, Senator Dorgan, to allow for the reimportation of prescription drugs from Canada by pharmacists and wholesalers. The United States leads the world in the discovery, development and manufacture of cutting-edge pharmaceuticals. Yet too many citizens who live in Maine and elsewhere must travel over the broader to Canada to buy the prescription drugs that they need to stay healthy for much lower prices than they would pay at their neighborhood drug store. It is well documented that the average price of prescription drugs is much lower in Canada than in the United States, with the price of some drugs in Maine being twice that of the same drugs that are available only a few miles away in a Canadian drug store. It simply does not seem fair that American consumers are footing the bill for the remarkable, yet costly, advancements in pharmaceutical research and development, while our neighbors across the border receive these medications at substantially lower prices. That is why I cosponsored legislation in the last Congress, the Medicine Equity and Drug Safety Act, to allow American consumers to benefit from international price competition on prescription drugs by permitting FDA-approved medicines made in FDA-approved facilities to be re-imported into this country. A modified version of that bill was signed into law last October, and I am extremely disappointed that the Department of Health and Human Services continues to refuse to implement the law. I am therefore pleased to cosponsor this amendment, which will allow American consumers to benefit from international price competition in two ways: First, it allows U.S. licensed pharmacists and drug wholesalers to import FDA-approved medications from Canada, which has a drug approval and distribution system comparable to ours. Second, the amendment codifies existing U.S. Customs' practices that allow Americans to bring limited supplies of prescription drugs into this country from Canada for their personal use. That way, consumers who follow the rules won't have to worry that their medicines will be confiscated at the border. While this amendment is a step in the right direction, it is not the solution to the prescription drug problem in the United States. I believe that our top priority should be to strengthen Medicare and include a prescription drug benefit, and I look forward to working on a bipartisan basis with my colleagues to give all Americans better access to affordable prescription drugs.

Ms. COLLINS

Ms. COLLINS. Mr. President, I was also disturbed by the testimony of the chairman of the Federal Trade Commission before the Senate Commerce Committee. He testified there were a number of examples where the branded and generic drug manufacturer actually conspired to game the system and attempted to restrict competition beyond what the Hatch- Waxman Act intended. One case cited in the chairman's testimony involved the producer of a heart medication which in early 1996 brought a lawsuit for patent and trademark infringement against the generic manufacturer. This is what happened. Instead of asking the generic company to pay damages, the brand name manufacturer offered a settlement to pay the generic company more than $880 million in return for keeping the generic drug off the market. So the brand name manufacturer essentially conspired with the generic manufacturer and paid off the generic manufacturer to keep the cheaper generic alternative from coming to the market. The consequences for consumers were considerable. This heart medication, which treats high blood pressure, chest pains, and heart disease, costs about $73 a month but the generic alternative would have cost only $32 a month. The compromise legislation that we will soon consider will make cost-effective generic drugs more available by restoring the original intent of the Hatch-Waxman Act and by closing the loopholes that are delaying competition and slowing the entry of generics into the marketplace. First, as amended by the Edwards-Collins compromise, the legislation would limit brand name manufacturers to a single 30-month stay for patents listed at the time of the brand product approval. Now, this will eliminate the brand manufacturer's ability to stack multiple and sequential automatic 30-month stays during patent litigation in order to keep generics off the market and extend their market exclusivity indefinitely. That is one of the primary abuses that our proposal would end. It will help ensure that key patent issues are adjudicated before the generic goes to market, while at the same time ensuring that improper late listed patents are not able to obstruct market competition. We heard in committee examples of the brand name manufacturer making extremely minor changes, such as in the color or the design of the packaging or the scoring of the pill that really did not indicate a different or improved use for the product but, rather, were devices intended to keep the generic off the market for a while longer. For subsequent patents for which no automatic 30-month stay is available, a brand name company can still obtain a preliminary injunction based on merit to protect their patent rights and keep the generic product off the market if it is justified, if there truly is a legitimate patent issue. However, in too many cases we found there is not a legitimate patent issue. This is just an abuse and an exploitation of the loopholes in the current patent law. Moreover, our legislation stipulates that the court is not to consider the possible availability of monetary damages when it is deciding whether or not to grant injunctive relief. This provision is intended to address the concern expressed by the brand name pharmaceutical companies that it is difficult to obtain injunctive relief in patent litigation because it is the court's view the treble monetary damages involved in these suits as an adequate remedy. Second, the legislation will prevent the current 108-day exclusivity provision of the Hatch-Waxman Act from becoming a bottleneck for subsequent generic competitors. Under Hatch-Waxman, the first generic drug company to file an application with the FDA certifying that the patents on the brand name product are either invalid or will not be infringed is now granted 180 days of market exclusivity, once its application is approved. Entry to the market for other generics is therefore frozen until the 180-day period runs out on the first-to- file. This provision has made it attractive for the kind of abuse that I mentioned earlier, and that is where a brand name manufacturer pays the first-to-file generic company to stay off the market. What that results in is nobody else can come to market, under the current law, during that 180-day period. So you can see how that is abused, when the brand name firm pays the generic manufacturer to essentially forfeit that 180 days of exclusive market rights. Under our legislation, the first generic applicant would forfeit that 180 days of exclusive market rights if it failed to go to market during that time, or entered into an agreement with a brand name company that the FTC determines to be anti-competitive. I think that would help end or eliminate altogether the kinds of deals between the brand name manufacturer and the generic manufacturer that are such a disservice to consumers. The original Hatch-Waxman act was a carefully constructed compromise that balanced an expedited FDA approval process to speed the entry of lower cost generic drugs into the market with additional patent protections to ensure continuing innovation. Regrettably, however, the law now needs to be strengthened and reformed so we can eliminate the abuses that we are seeing. This bipartisan compromise bill restores that balance by closing the loopholes that have reduced the original law's effectiveness in bringing lower cost generic drugs to market more quickly. Increasing access to these lower cost alternatives is all the more important as we begin work to provide an affordable and sustainable Medicare prescription drug benefit. Mr. President, I urge all our colleagues to join me in supporting this legislation. It will do a great deal to make prescription drugs more affordable by promoting competition in the marketplace and increasing access to lower price generic drugs. I yield the floor. Exhibit 1 Coalition for a Competitive Pharmaceutical Market, Washington, DC, July 10, 2002. Hon. Edward M. Kennedy, Chairman, Senate Health, Education, Labor and Pensions Committee, U.S. Senate, Washington, DC. Dear Mr. Chairman: As a broad-based coalition of large employers, consumer groups, generic drug manufacturers, insurers, labor unions, and others, we are writing to advise you of our strong support for the Edwards/Collins amendment to S. 812, the Greater Access to Affordable Pharmaceuticals Act. We believe it is critical that Congress act this year to pass legislation that would eliminate barriers to generic drug entry into the marketplace. The legislation you will be marking up today clearly would accomplish this long-overdue need. Prescription drug costs are increasing at double-digit rates, and clearly are unsustainable. Current pharmaceutical cost trends are increasing premiums, raising copayments, pressuring reductions in benefits, and undermining the ability of businesses to compete in the world marketplace. We believe that a major contributor to the pharmaceutical cost crisis is the use of the Drug Price Competition and Patent Term Restoration Act of 1984 clearly in ways unanticipated by Congress, which effectively block generic entry into the marketplace. The repeated use of the 30-month generic drug marketing prohibition provision and other legal barriers have resulted in increasingly unpredictable and unaffordable pharmaceutical cost increases. Although the compromise amendment being offered today does not totally eliminate the 30-month marketing prohibition provisions, as would be our preference, it does make important process changes that will lead to a more predictable, rational pharmaceutical marketplace. We recognize that compromises have been necessary to garner the support of a majority of the Members of the Committee and appreciate your leadership and the hard work of your staff. However, we would strongly oppose any additional amendments that would undermine the intent of this legislation by further delaying generic access or reducing competition and increasing costs to purchasers. We also remain opposed to legislation that would increase costs to purchasers either through extended monopolies or unnecessary and costly litigation. We are convinced that the legislation you are advocating will make a major difference in increasing competition in the marketplace and enhancing access to more affordable, high quality prescription drugs. We look forward to working with you and other Members of the HELP Committee to ensure that this important legislation is enacted this year. The Coalition for a Competitive Pharmaceutical Market is an organization of large national employers, consumer groups, generic drug manufacturers, insurers, labor unions, and others. CCPM is committed to improving consumer access to high quality generic drugs and restoring a vigorous, competitive prescription drug market. CCPM supports legislation eliminate legal barriers to timely access to less costly, equally effective generic drugs. CCPM Participating Members: American Association of Health Plans; Aetna; Anthem Blue Cross and Blue Shield; Blue Cross and Blue Shield Association; Caterpillar, Inc.; Consumer Federation of America; Families USA; Food Marketing Institute; Generic Pharmaceutical Association; General Motors Corporation; Gray Panthers; Health Insurance Association of America; IVAX Pharmaceuticals; National Association of Chain Drug Stores; National Association of Health Underwriters; National Organization for Rare Disorders; Ranbaxy Pharmaceuticals; TEVA USA; The National Committee to Preserve Social Security and Medicare; United Auto Workers; Watson Pharmaceuticals; and WellPoint Health Networks.

Ms. COLLINS. This week we have a tremendous opportunity to make progress on an issue that affects Americans of all ages, but particularly our elderly, and that is the high cost of prescription drugs. I hope by the time the end of next week comes along, we will have passed the tripartisan legislation to provide a prescription drug benefit under Medicare that is long overdue. I also hope we will pass the legislation to which we are about to proceed, and that is the Greater Access to Affordable Pharmaceuticals Act. I commend my colleagues from New York and Arizona, Senator Schumer and Senator McCain, for their leadership and hard work in bringing this issue to the forefront. I was pleased to have had the opportunity to join with my colleague from North Carolina, Senator Edwards, in offering a compromise in the Health, Education, Labor, and Pensions Committee last week where it was approved by a strong bipartisan vote. I also acknowledge the hard work of our chairman, Senator Kennedy, and our ranking minority member, Senator Gregg, on this issue. During the last 20 years, we have witnessed dramatic pharmaceutical breakthroughs that have helped to reduce deaths and disability from heart disease, cancer, diabetes, and many other diseases. As a consequence, people are living longer, healthier, and more productive lives. These medical miracles, however, often come with hefty pricetags, raising vexing questions about how patients, employers, and public and private health plans can continue to pay for them. Prescription drug spending in the United States has soared by 92 percent during the past 5 years to almost $120 billion. These rising costs are particularly a burden for the millions of uninsured Americans as well as for those seniors on Medicare who lack prescription drug coverage. Many of these individuals are simply priced out of the market or forced to make decisions--that no one should have to make--between paying the bills or buying the pills that keep them healthy. Skyrocketing prescription drug costs are also putting a squeeze on our Nation's employers. We are struggling in the face of double-digit annual premium increases to continue to provide health care coverage for their employees. I know from talking to the small businesses in my State, these escalating costs are a real problem for our smaller employers. They want to continue to provide health insurance coverage for their employees but they simply are finding it increasingly difficult to do so. If they pass on the higher health insurance costs to their employees, more and more of the workers deny coverage. They decline coverage because they cannot afford their share of the premium. One of the key factors behind the escalating costs of health insurance is the high cost of prescription drugs. These high costs are also exacerbating the Medicaid funding crisis that we hear about from our Governors back home as they struggle to bridge the growing shortfalls in their State budgets. The Presiding Officer and I have been working very hard on a proposal to increase the Federal match for Medicaid funding to help our Governors and our families, who are so dependent on these services, cope through this difficult time when States are struggling with budget shortfalls. In 1984, the Hatch-Waxman Act made significant changes in our patent laws that were intended to encourage pharmaceutical companies to make the investments necessary to develop these miracle drugs. At the same time, the legislation was intended to enable their competitors to bring lower cost generic alternatives to the market. In large measure, the Hatch-Waxman Act succeeded. Prior to Hatch-Waxman, it took 3 to 5 years for generics to enter the market after the brand name patent had expired. Today, lower cost generics often enter the market immediately upon the expiration of the patent. As a consequence, consumers are saving anywhere from $8 billion to $10 billion a year by purchasing generic alternatives. Moreover, there are even greater potential savings on the horizon. Within the next 4 years, the patents on brand name drugs, with combined sales of $20 billion, are set to expire. If the Hatch-Waxman Act were to work as it was intended, consumers should expect to save between 30 to 60 percent on these drugs as the lower cost generics become available after the patents expire. However, despite its past successes, it is becoming increasingly apparent that the Hatch-Waxman Act has been subject to serious abuse. While many pharmaceutical companies have acted in good faith, there is mounting evidence that some brand name and generic drug manufacturers have attempted to game the system in order to maximize their profits at the expense of consumers. News reports, for example, have detailed how the manufacturer of the lucrative drug Prilosec, the patent on which was set to expire last fall, has used the automatic 30-month stay under the Hatch-Waxman Act to tie up generic manufacturers in court, in litigation, over secondary patents in order to keep the generic version of the drug off the market. In the year 2000, Prilosec was the best selling drug in the world and generated an estimated $4.7 billion in U.S. sales. The Medicaid Program in Maine spent over $8 million on Prilosec in the year 2000. This bill could be cut in half if the generic alternative were available. So instead of the State of Maine spending $8 million on Prilosec if the generic were available, as it should have been last fall, the State of Maine would save about $4 million. That is much needed money that could be put into other health care services. I mention that because that is just one drug. But that illustrates what happens when a brand name manufacturer exploits the loopholes in the current law to delay consumers access to the generic equivalent. That is just wrong. It is no wonder that this legislation is supported by a broad coalition representing Governors, insurers, businesses, organized labor, and individual consumers who are footing the bill for these expensive drugs and whose costs for popular drugs such as Prilosec would be cut in half if the generic alternative was available when it was supposed to have been. We are not talking about infringing on the legitimate patents that protect the innovative drugs developed by pharmaceutical companies. We are talking about eliminating abuses that we are finding increasingly prevalent where the brand name manufacturer exploits the loopholes in the current law by engaging in excessive litigation for the sole purpose of keeping the generic off the market. I ask unanimous consent that letters from the Business for Affordable Medicine and the Coalition for a Competitive Pharmaceutical Market expressing support for the Edward-Collins compromise approved by the committee be printed in the Record at the conclusion of my remarks.

Ms. COLLINS

Ms. COLLINS. Madam President, as every Member of this Chamber knows and, more importantly, as every American investor knows, we have recently witnessed lapses in corporate responsibility unlike anything that has occurred during the past 70 years. It is our role to determine why this has happened and what can be done to prevent it from continuing to happen. I rise to offer some thoughts, as well as to lend my support, to the accounting reform legislation now on the Senate floor. Several years ago, Federal Reserve Chairman Alan Greenspan characterized the latter stages of the great bull market of the 1990s as irrational exuberance. Although stock prices rose for a few years after that statement, they ultimately collided with economic reality and embarked upon an extended decline. It now appears that that irrational exuberance was being sustained in some instances by improper accounting. Put differently, one way of satisfying the insatiable appetite of some for ever-increasing corporate profits, as well as for rich compensation packages, was to cook the books. Many, although not all, of the recent alleged abuses have occurred in what has been the hot sectors of our economy. Electric deregulation, the development of the Internet, new medical treatments, and the spread of broadband are all thought to hold enormous prospect for future growth. Unfortunately, for some of the companies in those areas the growth in accounting creativity outstripped the growth in business fundamentals. I make this point because I think it contains a lesson for those of us in Congress, as well as for Federal and State regulators. During my years as a financial regulator in my home State of Maine, the advice we gave to investors, to the point where it began to sound like a broken record, was that if it seems too good to be true, it almost certainly is. The comparable message for those of us with oversight responsibility is that if one is not vigilant during the boom, when things seem too good to be true, cleaning up after the bust will be far more difficult. During my first 4 years in the Senate, I was privileged to serve as the chairman of the Senate Permanent Subcommittee on Investigations. During that time, I held more investigations into fraud and abuse in our securities markets than on any other subject, despite the fact we were in the midst of a roaring bull market. Indeed, the roaring bull market made those investigations seem all the more necessary. More recently, Senator Levin and I teamed up in an investigation of Enron Corporation, an investigation that is ongoing. In fact, we just released our first report on the failures of the Enron board of directors to exercise its fiduciary responsibilities. We found that too many of the Enron directors acted as rubber stamps rather than as watchdogs. In short, the principal lesson of recent events for those of us in Congress may be the need to remember the importance of vigorous oversight and tough enforcement during the good times as well as the bad. Let me now turn my attention to the conflicts of interest faced by some accountants, brokers, and corporate directors. American capitalism relies heavily on the fiduciary duty concept to protect those who entrust their money to large and often distant corporations. Accountants have a duty to investors to ensure the accuracy of financial statements. Directors have a duty to make certain that managers act in the best interest of the corporation, and stockholders have a duty to give advice that will best serve their client's needs. I believe that this structure is fundamentally sound, but I also believe we have allowed these trust relationships to be seriously eroded by conflicts of interest. Confidence in our capital markets depends upon accurate and fair financial statements. To achieve that objective, we follow a maxim that President Reagan put forth in another context; namely, ``trust but verify.'' We trust corporate managers to give us honest financial statements but, just in case, we look to accountants to verify the numbers. Too often in the recent past accountants have let us down, principally because, in my view, conflicts of interest have undermined their fundamental fiduciary duty to investors. The source of this problem is that some accountants can depend on those whose books they examine not only for their auditing jobs but much more worrisome for lucrative consulting contracts. In some ways, the situation for brokers can be even worse, because they frequently have a personal, as well as an institutional, relationship with those to whom they owe a duty. As the recent Merrill Lynch settlement demonstrated, when the same individuals are involved in giving advice to retail customers and securing underwriting business from the corporations they are supposed to be objectively rating, it is the investor who losses. Again, the fiduciary duty concept is not inherently flawed. Rather, it has been eroded by conflicting interests that cannot comfortably coexist. The third component of what might be called the fiduciary duty triad is the corporate board. Frequently owing their positions to those whose activities they are to monitor, some board members suffer from the appearance, and in some cases the reality, of conflicts of interest. In my view, given their part-time status and their dependence on management for information, the role of the independent directors, perhaps even more than the role of accountants or those of brokers, needs more scrutiny. In our recent report on the role of the Enron board of directors in the corporation's failure, the Permanent Subcommittee on Investigations found that the board ignored countless warning signs of wrongdoing. In some cases, the board actually approved highly irregular, off-the-books partnerships that masked the company's true liabilities. The board's audit committee failed miserably to ensure the independence of the company's auditor, allowing Andersen to provide internal audit and consulting services while at the same time serving as Enron's outside auditor. In other words, in some ways, Andersen was auditing itself. Finally, directors blessed financial deals that created conflicts of interest for the top executives of Enron Corporation. Such conflicts of interest are rotting the pillars supporting an essential element of capitalism, and that is the ability of investors to rely on those to whom they entrust their money. Excising that rot requires two steps. First, we must redefine the roles of the accountant, the broker, and the board member. We must make it absolutely clear that their undiluted responsibility is to the investor. Second, we must enforce those obligations with tough sanctions, such as those we approved yesterday, that will deter those who would breach these fiduciary duties. This leads logically to the role of the Government regulator. I do not see regulation replacing the fiduciary roles I have described for the simple reason that having Government verify every number in every financial statement would create a nation of regulators. The more effective role for the regulator is to make certain that others honor their obligations and to take swift and meaningful action when they do not. I know from personal experience as a regulator in Maine that this is no easy task, and it is our responsibility to ensure that the regulators who carry it out have the necessary authority and the financial resources to do the job. I am pleased the bill before us today incorporates provisions from legislation that I have introduced that will allow the Securities and Exchange Commission to discipline those brokers and investment advisers who have been barred by State regulators from operating within that State. As a result, the SEC will have the option of giving nationwide effect to the bans imposed by individual States, thus protecting citizens nationwide from dishonest or unethical brokers without having to undertake separate investigations. This is especially important because as we learned in my subcommittee's hearings on fraud in the microcap stock market, it is very easy for small-time crooks to move out of one State and into another, setting up shop and defrauding investors all over again. The reforms needed to restore trust in our capital markets will require tough, effective action by government and self-regulatory organizations. I call on our Nation's business schools to examine the ethical and professional training they provide to corporate managers, accountants, brokers, and board members. The concept of a free market is one that is free from government direction but not free from the duty to act ethically, honestly, and competently. If our corporate leaders lack integrity, no amount of regulation will preserve our economy. How effectively we are conveying this message strikes me as well within the unique expertise of those running our business schools and training our future corporate leaders. Congress, the SEC, State regulators, the exchanges, and perhaps even our educational institutions can help solve our current problem. Nowhere is the obligation to act greater than on Wall Street and in our corporate boardrooms. The American people are justifiably outraged by the breakdown in corporate ethics. This is not thievery by those lacking the resources to buy food and medicine, this is thievery by those with the resources to buy Picassos and Porsches. As a people, we do not begrudge others who earn their success, but we will not tolerate those whose success rests on breaching ethical and legal obligations. We must also recognize that although not often mentioned, this problem has ramifications for our standing in the world community at a time when others are waging war on the American system. Our most successful exports since the end of World War II have been our political democracy and our free markets. Indeed, as China demonstrates, our economic views have prevailed even when our political ideals have yet to take root. Having persuaded the rest of the world of the vitality and the creativity of free markets, it would be tragic if we lost our way just when our economic values are gaining widespread acceptance. A particularly ironic aspect of the current situation and one that would have Marx and Lenin spinning in their graves: Russia is taking steps to strengthen its system of corporate governance at a time when ours appears to be crumbling. While we need not worry that Moscow will replace New York as the world's financial center, it is not unreasonable to be concerned about how other nations judge our response to our current problems. Indeed, the rise in the euro and the drop of the dollar are disconcerting indications of their view to date. This is just one more reason we must act swiftly to put our house in order. Recent corporate misdeeds have caused great harm, costing our economy and our shareholders billions of dollars and many people their retirement savings as well as their jobs. The impact on investor- employees who have lost both their jobs and their retirement savings has been especially cruel, and those responsible have forgotten that, because capitalism can survive only if people believe they can trust strangers with their money. Honesty and fair dealing are the lifeblood of our economic system. It would also be unfair to paint with too broad a brush. We should take care not to condemn the many executives who do honor their obligations to their employees and their shareholders. Indeed, it is partly for their benefit as well as for the benefit of all Americans that we must restore confidence in our corporate sector. In 1997, in my first statement on the floor of the Senate, I quoted the following observation from Winston Churchill: ``Some see private enterprise as a predatory target to be shot, others as a cow to be milked, but few see it as a sturdy horse pulling the wagon.'' I added that I do see private enterprise as that sturdy horse, and in the wagon it is pulling are the jobs of our constituents. I continue to hold that view. But we must recognize that the wagon has some loose wheels. It is our responsibility to the American people to make sure they are tightened and to institute the reforms that are needed to restore faith in corporate America. I yield the floor.

Ms. COLLINS

Ms. COLLINS. I thank the Chair. Madam President, I ask unanimous consent that I be permitted to proceed for 15 minutes.

Ms. COLLINS

Ms. COLLINS. Madam President, I rise today to speak on one of the most important pieces of legislation that we will consider this year; that is, the National Defense Authorization Act for Fiscal Year 2003. This important bill authorizes funding to strengthen our military, to address the challenges of today, and to anticipate the threats of tomorrow. We are a nation at war. This bill recognizes the critical role that our Armed Forces play in the war against terrorism and in securing our homeland. It will help ensure that our troops are better paid, better housed, and better equipped than ever before. I had the privilege of visiting our troops in central Asia last January. I was a member of the first bipartisan Senate delegation to visit our troops on the front lines in the war zone. I was inspired by the patriotism and professionalism of our men and women in uniform. As long as they know our Nation is united behind them, they are willing to bear any hardship no matter how harsh, undertake any mission no matter how dangerous, and willingly risk their lives each and every day just by doing their jobs. The obligation on us, in return, is clear. The legislation before the Senate recognizes our obligation to improve the quality of service for our American forces who need and deserve the finest equipment and the best resources to combat any threat. For example, the bill includes a 4.1-percent across-the-board pay raise for our military personnel and an increase in the housing allowance that will reduce the average out-of-pocket expenses for off- post housing to 7.5 percent in 2002. This represents significant progress toward the goal of elminiating by 2005 the need for our military personnel to reach into their own pockets to pay for housing. I also support, and cosponsored, an amendment adopted by the Senate earlier this week that will repeal the prohibition on concurrent receipt of non-disability retired military pay and veteran's disability pay for our military retirees, eliminating an inequity and allowing these veterans to collect the full amount they have earned. This bill also begins to address the needs and concerns of our reserve forces. Specifically, it includes a study that will require the Department of Defense to assess the compensation and benefits of our reservists, who have been called upon more and more to serve our country and protect our freedoms. Under the total force concept, more than 80,000 Selected Reserve and National Guard personnel are now on active duty, nearly 9 months after the attacks of September 11. This study is the first step to ensuring that our reservists receive the compensation and benefits that are proportional to the commitment and services that they provide. While the bill reflects significant investments in our national defense--including a significant increase to respond to the attacks of September 11--it will take several years of sustained increases in defense spending to completely recover from the ``procurement holiday'' of previous years. I stand with the majority of the Armed Services Committee that believes more needs to be done to address the shipbuilding shortfalls that this administration inherited from the previous administration. The Navy's shipbuilding program simply is not adequate to meet the needs of a more dangerous world. I am particularly concerned about the under-funding of the Navy's destroyer, or ``DDG-51'' program, which serves as the backbone of the Navy's surface fleet. This bill fully funds only two DDG-51s next year despite the clear need for a third. I am therefore pleased that the Senate version of the bill does include an increase of $125 million above the administration's request toward the procurement of an additional much-needed destroyer. During the committee markup, Senator Warner, with my strong support, offered an alternative shipbuilding proposal that would have provided even more to meet the need for more ships through an additional $1 billion. Also, the alternative would have provided multi-year authority and additional advanced procurement for several shipbuilding programs. Further, it would have restored $690 million of the almost $900 million cut in various missile defense programs. I am very disappointed that this shipbuilding initiative was rejected in committee on a straight party-line vote as, ultimately, there will be a high price to pay if this shipbuilding trend is not reversed. We are making some progress. The out-year budgets for the Department of Defense have improved markedly in investing more resources into rebuilding our Naval Fleet. I am encouraged and optimistic, however, that the Navy and its industry partners have heard our concerns about this egregious shortfall. Just recently an agreement was reached by the Navy, General Dynamics and Northrop Grumman Ship Systems to transfer ship construction between the two corporations' shipyards. The terms of this agreement is based on adding two additional DDG ships to the Navy's FY 2003 shipbuilding plan, which will be awarded to the Bath Iron Works in my State. Bath Iron Works has a long tradition of producing quality ships for the Navy. This agreement will immediately transfer DDG 102 to the Bath Iron Works facility for construction. Further, as a result of this agreement, the Navy is expected to realize significant net cost savings on these programs, which could then be used to further invest in additional shipbuilding initiatives. The increased number of DDGs at Bath should provide increased stability and predictability at the yard, and maintain the critical surface combatant work force for the industrial base to remain competitive for the DD(X) family-of-ships. The swap agreement has also led to discussions and a tentative agreement on the price and terms of a new DDG multi-year procurement. This contract, once awarded, will provide seven ships over the next four years, including three DDG swap option ships that Bath alone will have the opportunity to bid on. This new multi-year procurement contract will be the largest contract award in Bath's history. Let me state that again, this pending multi-year contract will be the largest contract awarded in Bath's history, and begin to remedy the shortfall in our naval fleet. While the debate continues on how to transform our armed forces, the Senate is taking action to support our armed forces and the administration's priorities. I would like to take this opportunity to acknowledge and thank Chairman Levin and our senior Republican, Senator Warner, for their tireless efforts to tackle the tough issues and produce an authorization bill that funds a number of critical priorities and provides support for the men and women of our armed forces. Our armed forces stand ready. Now it is our responsibility to equip and support our men and women to meet the threats and challenges of today and those of tomorrow. I believe the legislation before us is a strong step in the right direction, and I am pleased to have had an opportunity to shape this legislation as a member of the Senate Armed Services Committee. I yield the floor and I suggest the absence of a quorum.

Ms. COLLINS. Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Ms. COLLINS

Ms. COLLINS. I thank the distinguished chairman for her commitment to support investments in the well-being of a most precious national asset--our men and women in uniform. And I look forward to working with her on this important issue. The support of the chairman of the Emerging Threats and Capabilities Subcommittee will be critical, and welcomed, to see that leading edge medical research is not only explored, but deployed in the days ahead.

Ms. COLLINS. I am hopeful that as our bill moves through floor consideration and conference with the House, we can work to ensure that this type of research is adequately funded within the Department of Defense. There are many aspects to consider in taking care of our soldiers, sailors, airmen and marines who are sent into harm's way. In times like these, preserving the well-being of our men and men in uniform should be given the investment necessary to see that research like this gets to the field.

Ms. COLLINS. Madam. President, I rise today to discuss medical research aimed at preserving blood products, human organs, and other wound-repairing tissues. As the chairman may recall, last year I discussed with Chairman Levin the fact that this research could dramatically impact our ability to overcome current medical challenges involved in blood and tissue preservation. Recent U.S. military actions have resulted in stationing troops in harsh climates and conditions, such as those experience in Afghanistan. Current locations and missions require new capabilities in combat casualty care, and these capabilities would include stable blood products, organs, and wound repairing tissues that will enhance human survivability under conditions of trauma, shock, anoxia, and other extreme conditions, including extreme environment. The Department of Defense needs to develop tissues with a long shelf life to support combat casualty care. Research in this area could develop stress- tolerant biosystems or tissues that selectively control critical metabolic processes by exploiting an enhanced understanding of differential gene expression in bio-organisms and systems exposed to extreme environments.

Ms. COLLINS

Ms. COLLINS. Mr. President, I am pleased today to rise to introduce the Teacher Tax Relief Act 2002. I am joined with my colleagues, Senator Warner, Senator Landrieu, and Senator Allen in introducing this legislation to help our teachers who selflessly reach deep into their own pockets to purchase supplies for their classrooms or to engage in professional development. Senators Warner, Landrieu, and I have long led the effort to recognize the invaluable services that teachers provide each and every day to our children and to our communities. We were very pleased when earlier this year the economic recovery package included our provision to create an above-the-line deduction for teachers who purchase classroom supplies. This tax relief is significant in that it recognizes for the first time the extra mile that our dedicated teachers go in order to improve the classroom experience for their students. Today, we introduce legislation that builds upon the relief enacted earlier this year. Our bill would double the amount that a teacher can deduct--from $250 to $500--and includes professional development expenses in the deduction. Our bill would also make this modest tax relief permanent whereas the provision in the economic stimulus package is scheduled to sunset in 2 years. While our bill provides financial assistance to educators, its ultimate beneficiaries will be our students. Other than involved parents, a well-qualified teacher is the single most important prerequisite for student success. Educational researchers have demonstrated, time and again, the strong correlation between qualified teachers and successful students. Moreover, educators themselves understand just how important professional development is to maintaining and expanding their level of confidence. When I meet with teachers from Maine, they repeatedly tell me of their desire and need for more professional development. But they also tell me that, unfortunately, school budgets are so tight that frequently the school districts cannot provide that assistance that a teacher needs in order to take that additional course or pursue that advanced degree. As President Bush aptly put it: ``Teachers sometimes lead with their hearts and pay with their wallets.'' A recent survey by the National Center for Education Statistics highlights the benefits of professional development. The survey found that most teachers who had participated in more than 8 hours of professional development during the previous year felt ``very well prepared'' in the area in which the instruction occurred. Obviously, teachers who are taking additional course work, and pursuing advanced degrees, become even more valuable in the classroom. Increasing the deduction for teachers who buy classroom supplies is also a critical component of my legislation. So often teachers in Maine, and throughout the country, spend their own money to improve the classroom experiences of their students. While most of us are familiar with the National Education Association's estimate that teachers spend, on average, $400 a year on classroom supplies, a new survey demonstrates that they are spending even more than that. According to a recent report from Quality Education Data, the average teacher spends over $520 a year out of pocket on school supplies. I have spoken to dozens of teachers in Maine who have told me of the books, rewards, supplies, and other materials they routinely purchase for their students. Idella Harter, president of the Maine Education Association, is one such teacher. She told me of spending over $1,000 in 1 year, reaching deep into her pocket to buy materials, supplies, and other treats for her students. At the end of the year, she started to add up all of the receipts that she had saved, and she was startled to discover they exceeded $1,000. Idella told me, at that point she decided she better stop adding them up. Debra Walker is another dedicated teacher in Maine who teaches kindergarten and first grade in Milo. She has taught for over 25 years. Year after year, she spends hundreds of dollars on books, bulletin boards, computer software, crayons, construction paper, tissue paper, stamps and ink pads. She even donated her own family computer for use by her class. She described it well by saying: ``These are the extras that are needed to make learning fun for children and to create a stimulating learning environment.'' Another example is Tyler Nutter, a middle school math and reading teacher from North Berwick. He is a new recruit to the teaching profession. After teaching for just 2 years, Tyler has incurred substantial ``startup'' fees as he builds his own collection of needed teaching supplies. In his first years on the job, he has spent well over $500 out of pocket each year, purchasing books and other materials that are essential to his teaching program. Tyler tells me that he is still paying off the loans that he incurred at the University of Maine-Farmington. He has car payments and a wedding to pay for. He is saving for a house. And he someday hopes to get an advanced degree. Nevertheless, despite the relatively low pay he is receiving as a new teacher, he says: ``You feel committed to getting your students what they need, even if it is coming out of your own pocket.'' That is the kind of dedication that I see time and again in the teachers in Maine. I have visited almost 100 schools in Maine, and everywhere I go, I find teachers who are spending their own money to improve their professional qualifications and to improve the educational experiences of their students by supplementing classroom supplies. The relief we passed overwhelmingly earlier this year was a step in the right direction. As Tyler told me, ``It's a nice recognition of the contributions that many teachers have made.'' We are committed to building on this good work. Again, I thank the senior Senator from Virginia, Mr. Warner, for being a leader with me on this bill. We invite all of our colleagues to join us in recognizing our teachers for a job well done.

Ms. COLLINS

Ms. COLLINS. I thank my colleagues for participating in this colloquy, which has added measurably to the debate on the underlying bill. I thank particularly the distinguished senior Senators from Texas and Connecticut, without whom this bill would not be before us today, and I would like to ask them if they would commit to doing all they could to ensure that the legitimate needs of group life insurers are addressed in the conference on this legislation.

Ms. COLLINS. Madam President, the bill that we are debating today takes critical steps to address the problems arising from the September 11 tragedy that are being experienced by the commercial property and casualty insurance industry. I understand however, that the group life business has also been impacted by the tragic events of September 11. Group life insurance covers nearly 160 million Americans and represents 40 percent of all life insurance in force in the United States, or, $6 trillion of protection to Americans--most of whom are average working Americans. Group life insurance is a highly efficient and inexpensive way to deliver much needed security to people who might otherwise have little or no coverage. This product is inexpensive because it is sold as a single contract between an insurance company and a corporate buyer, the employer, and covering a great number of lives. This greatly simplifies and reduces costs of marketing and administering of the product. It is typically a staple of the employee benefits package provided by employers to their employees. While I support the terrorism insurance bill that we consider today, I am concerned that it fails to address issues that threaten the continued vitality of group life insurance providers. And so I am pleased to have the opportunity to engage in a colloquy on this issue with the Senator from Nebraska, a true expert on insurance matters, the senior Senator from Maine, and three key members of the Senate Banking Committee. I understand that the primary problem, both for the property and casualty insurers, as well as the group life insurers, is the difficulty in obtaining reinsurance after the disaster. Am I correct?

Ms. COLLINS

Ms. COLLINS. Mr. President, I rise today to recognize the accomplishments of an outstanding group of young people from Massabesic High School in Waterboro, ME. This group of 20 students represented Maine in the national finals of ``We the People . . . The Citizen and the Constitution'' in Washington, DC, May 4-6, 2002. The students from Massabesic High School demonstrated teamwork and dedication to reach this milestone and represented Maine ably and with determination. During the competition, students from 50 classrooms across the country put their skills to the test demonstrating their understanding of the values and ideas embodied in American constitutional government. I would like to recognize the participating students, Allie Auger, Kirsten Benham, John Blow, Selina Carter, Alyssa Daniels, Scott Doyle, Brian Dupee, Kaleigh Gerity, Tucker Gilman, Matt Kimball, Matt Krueger, Aaron Libby, Eric Matheson, Bri Morin, Glen Petrarca, Meghan Roubo, Joe Rousseau, Jason Roy, Courtney Strout, and Dawn Theriault for their persistence, dedication, and drive. I also stand to recognize the dedication and work of their teacher, Joseph Wagner, the district coordinator, David Ezhaya, and the state coordinator, Julia Underwood. I am very proud to recognize the efforts and accomplishments of this exceptional group of students from Maine and bring their achievement to the attention of the Senate.

Ms. COLLINS

Ms. COLLINS. I thank the Senator. Madam President, I will make one final point. This proposal will not only help our States balance their budgets without slashing essential social services such as the Medicaid Program, but it will also provide much-needed help to struggling health care providers such as our rural hospitals, our nursing homes, and our home health agencies. Those health care providers have been struggling with inadequate reimbursements under Medicaid and Medicare. By increasing the Federal share of what is a partnership between the Federal Government and the States to provide health care for our low-income families, we will also be helping to stabilize the health care providers, particularly in rural States such as Nebraska and Maine. So that is another reason you will find that health care providers associations are strongly backing our legislation, as is the National Governors Association. This is not a partisan issue; it is one where we have come together to provide much-needed relief to our partners, the States. My hope is that we will expeditiously enact our proposal before the July 4 recess.

Ms. COLLINS. The Senator from Nebraska has asked a very important question. He was a leader, when he was Governor, in helping people in his State move from welfare to work, to give people the dignity and independence that comes from the ability to earn a living. Those efforts depend on child care. They depend on assistance with transportation. They depend on assistance with education, with expanded Medicare coverage. In order for people to be able to move from welfare to work, we have to have the social supports in place to ease that transition. Those supports would be in jeopardy if we do not provide our States with the assistance we are discussing. Furthermore, there are States that are scheduled to have an actual decline in the amount of Medicaid match that they receive from the Federal Government. That could not happen at a worse time. It would cause them to slash services even more. We cannot allow that to happen. This is a temporary problem. We are proposing temporary assistance to our States. The economy is recovering, but the effects still linger. States are still seeing the demand for social services. I ask, through the Chair, the Senator from Nebraska--yielding some of my time to him--whether he has seen the kinds of problems in his State that we are seeing in Maine where revenues have dropped unexpectedly one more time, causing the legislature and the Governor to confront a pending deficit in a budget that had already been enacted.

Ms. COLLINS. I am happy to yield.

Ms. COLLINS. Madam President, I rise today with my good friend, Senator Ben Nelson, to discuss the fiscal plight of our States. Here in Washington, consumed with our own budget challenges, we often forget that we have 50 partners in our efforts to provide needed health, education, and other essential services to our citizens. Our partners are our States and they need our help. No one is more aware of the difficulties States are facing than Senator Nelson. As a former Governor, he understands that we are most effective when we work arm in arm, not toe to toe, with our partners, the States. Senator Nelson and I have filed an amendment to the supplemental appropriations bill to provide emergency short-term fiscal relief to the States. Our amendment is needed, and it is needed now. The recession may have eased earlier this year, but its effects still linger. They are felt acutely by States from Maine to Nebraska, from New York to Washington State. And I know the Presiding Officer is a cosponsor of the underlying bill that Senator Nelson and I have introduced. Though the recession has ended and economic growth has picked up in the first quarter of this year, unemployment continues to rise. Now it stands at 6 percent. It is an 8-year high. The recession, the resulting rise in unemployment, and the tragic events of September 11 have placed tremendous and unanticipated demands on government services and resources. At the same time, these factors have contributed to a dramatic and unexpected drop in government revenues at precisely the time when more revenues are needed to respond to the confluence of challenges that confront us. The combination of the increasing demands for services and the unexpected drop in revenues is causing a fiscal crisis for State budgets all across this Nation. According to the National Governors Association and the National Association of State Budget Officers, more than 40 States are facing a combined budget shortfall of between $40 and $50 billion. Most States have seen their estimates of tax collections for the current year decrease, often dramatically. State governments are scrambling to respond. Forty-nine States are required by law or constitution to balance their budgets, so running a temporary deficit is simply not an option. Moreover, the problem is getting worse and is not likely to improve until next year at the earliest. A survey released by the National Governors Association shows that individual tax revenues for the first 4 months of this year are running nearly 15 percent below last year's levels. The problem is not an isolated one. Thirty-nine States have been forced to reduce their already enacted budgets for fiscal year 2002, by cutting programs across the board, tapping rainy day funds, laying off employees, and reducing important services. States have been forced to cut a number of critical programs. Twenty- nine States have attempted to balance their budgets by cutting spending on higher education. Twenty-five States have cut corrections programs. Twenty-two have been forced to slash Medicaid. Seventeen States have cut spending for K-12 education. And 10 States have reduced aid to local governments. In addition, a number of States have raised taxes and fees by a total of $2.4 billion. We believe the Federal Government can and should help our partners, the States. We should do so in an effective and responsible way. Our amendment would provide a temporary increase in the Federal Medicaid matching rate and would provide block grant funds to each and every State. Specifically, our proposal would increase the Federal Government's share of each State's Medicaid costs by 1 percent and hold the Federal matching rate for each State harmless for the second half of this fiscal year and all of the next. In addition, our proposal includes a temporary block grant to States that would help them pay for the rising demand in social services resulting from the economic downturn. Our amendment would provide approximately $8.9 billion in total fiscal relief to the States that would allow them to continue rather than contract Medicaid and other vital services. Our amendment would provide fiscal relief to each and every State that is struggling to balance the budget and care for their citizens. It has been endorsed by the National Governors Association, the American Hospital Association, the American Health Care Association, and the Visiting Nurse Associations of America. These groups understand the importance of providing assistance to States at a time when many are forced to look at cutting Medicaid and other essential health care programs. For that reason, our bill targets most of the assistance to the Medicaid Program. That is the fastest growing component of State budgets. While State revenues were stagnant or declined in many States last year, Medicaid costs increased by 11 percent. This year, Medicaid costs are increasing at an even higher rate--13.4 percent. My home State of Maine is one of a number of States that has been forced to consider cuts in the Medicaid Program in order to compensate for declining revenues and to balance the budget. Earlier this month, after the legislature had already adjourned for the year, Maine's budget estimators determined that the State's revenues would come in some $90 million under budget for this year and would most likely result in another $90 million shortfall in the year to come. Maine, despite the fact the legislature has gone home after enacting cuts earlier this year, is once again confronted with the need to reexamine its budget and make painful cuts. Among the programs being considered for reductions in Maine are Medicaid and general purpose aid, which funds are vital for K-12 education. Maine is not alone. Maine is typical. If we do not help, if we do not provide some modest, reasonable aid to our States, States will be forced to slash health care, education, and social service programs in order to balance their books. The amendment we have filed would help to bridge Maine's funding gap by bringing an additional $56 million to my State. It would help us preserve Medicaid and other essential programs such as education over the next 18 months, while the economy continues to recover. I emphasize, even with our amendment, States are still going to face very difficult choices. They are still going to have to cut worthwhile programs. But with our amendment, States will be able to keep critical programs such as Medicaid, such as education, without having to slash them and cause real harm for the low-income populations in our States. The challenges facing Governor King in Maine and other Governors across the country are considerable. The decisions they may be forced to make could affect the access of millions of Americans to health care and social services. They simply need our help. The proposal Senator Nelson and I have put forth would do just that. We are very hopeful that the distinguished chairman and ranking minority member on the Appropriations Committee will join us in the effort to assist our States. If the supplemental appropriations bill is not the right vehicle for our amendment, we hope they will help us to identify very soon an appropriate bill to which our amendment could be attached. We need to provide this help right away. Most States begin a new fiscal year next month, and we need to provide this much-needed assistance now. It has been a great pleasure to work with the Senator from Nebraska on this important initiative.

Ms. COLLINS. Madam President, the Senator from Nebraska raises a very important question. If we do not act, if we do not act within the next few weeks, States will have no choice but to slash their Medicaid Programs, thus depriving our needy low-income families of the health care they depend on. They will be forced to cut education programs for K-12 and for State universities. They will be forced to make choices that will cause real harm to the citizens of this country. They have no other option. Unlike the Federal Government, they cannot temporarily run a deficit. Forty-nine States are required to balance their budgets so they will have no choice, given that the fiscal year for most States is going to begin on July 1, but to make Draconian cuts in the programs that serve the most needy members of our society. We need to act as their partners. We need to provide them with help to get over this difficult period. I thank the Senator from Nebraska for his excellent question.

Ms. COLLINS

Ms. COLLINS. Mr. President, I join Senator Levin in submitting a resolution that will designate the week of August 25, 2002, as National Fraud Against Senior Citizens Awareness Week. This designation of this week will increase public awareness of mail, Internet and telemarketing schemes that target elderly Americans. It is through increased awareness on the part of seniors, their families, and their caregivers that such schemes, which rob seniors not only of their hard-earned savings but of their dignity and self respect, can best be prevented. This kind of fraud, unfortunately, is pervasive. Last year alone, the U.S. Postal Inspection Service responded to 66,000 mail fraud complaints, arrested nearly 1,700 mail fraud offenders, and secured nearly 1,500 convictions. The elderly are often especially vulnerable, and they are frequently among the least able to afford being defrauded. The AARP, the National Association of Attorneys General, and the Federal Trade Commission have estimated that 85 percent of the victims of telemarketing fraud are age 65 or older. During hearings of the Permanent Subcommittee on Investigations that I chaired last June on mail, Internet and telemarketing fraud, several elderly witnesses testified about how they had been defrauded of thousands of dollars and the resulting hardships caused by the loss of their life savings. Mrs. Ann Hersom of Acton, for example, testified that her 80-year-old husband, formerly a successful businessman, had fallen prey to devious telemarketers and clever mail solicitations. She estimated that he lost $20,000 to these schemes, and described how devastating these losses had been to their family. The telemarketing fraud industry is a highly mobile, sophisticated racket that very often involves ``boiler rooms'' in which hundreds of people make high pressure calls, sometimes 16 hours a day, seven days a week. These fraudulent telemarketers often gear their pitches to elderly citizens living alone and fearful of not having sufficient funds for their remaining years. In fact, it appears that some unscrupulous telemarketers may select their elderly victims by using lists to target those who have recently placed a spouse in a nursing home. Thus, the friendship and compassion these telemarketers appear to offer come when the elderly are particularly vulnerable to such enticements. Foreign countries have unfortunately become a source of entry for lottery, sweepstakes and advance-fee-for-loan scams that prey upon Americans through direct mail and telemarketing. According to Federal Trade Commission figures, U.S. consumers filed nearly 13,000 complaints against foreign companies during calendar year 2001. Similarly, the dollar value of losses reported by consumers against these companies is nearly $25 million. In the first quarter of 2002, U.S. consumers have filed nearly 7,000 complaints against foreign companies. How do we fight such fraud? The first line of defense against mail, Internet and telemarketing fraud is to promote public awareness of the dangers of such crimes, the types of schemes in which criminals are likely to engage, and what consumers can do to report fraudulent overtures and help law enforcement officials catch up with the con artists. National Fraud Against Senior Citizens Week is designed to do just that. During the week of August 25, 2002, the U.S. Postal Inspection Service, together with the Senior Action Coalition, a grassroots multi- agency organization based in Pittsburgh, will launch a national multi- media fraud prevention campaign. The campaign will be kicked off with events in Washington, DC, Maine, and elsewhere. The campaign will include radio and television public service announcements by national spokesperson Betty White. On Sunday, August 25, announcements in newspapers will run in the 13 states that recorded the most complaints of fraud by seniors, including Maine. Poster displays highlighting the problem and what seniors and their caregivers can do to protect themselves and report fraud will be displayed in post office lobbies and other public areas, and mailers are planned to be sent to seniors. Designating National Fraud Against Senior Citizens Awareness Week will help reach a wide segment of America's elderly and those who care for them with the time-honored advice of: ``If it sounds too good to be true, it probably is too good to be true.''